CORPORATE FINANCE 1

GROUP WORK – TERM 1, 2023

Question

You have just been assigned by the head of the analysis department at an Investment consulting
company to conduct research one firm listed on the Vietnam stock exchange in order to give
the advise to clients. Use the financial knowledge and tools to prepare an advisory report for
the client, include the following information:

1. Analyse the factor affecting the choosen firm (macroeconomic factors, busines
characteristics, market, competitors)

2. Analyse the corporate governance factors (strategy, ownership structure, investment

activities….)

3. Analyse the liquidity ratios

4. Analyse the asset structure and capital structure

5. Analyse the activity ratios and profitability ratios

6. Analyse the market ratios

7. Analyse the stock price volatility risk (use the variance and standard deviation)

8. Evaluate the impact of financial ratios to stock price of the firm

Guidelines:
For each of sections, the relevant facts should be the first set out (use last 3-5 years of
information), and conclusion should be made based on reasoned analysis.
The following is a summary of the areas that have to be analyzed and reported.
1. Executive Summary
Include a summary of the contents of the report and highlight its major conclusions and
recommendations.
2. Company Overview
Provide the external (macroeconomic factors, busines characteristics, market,
competitors) and internal factors affecting the firm (strategy, ownership structure, investment
activities….)
3. The company’s performance
In this section, you will assess the company's financial ratios (liquidity ratios, asset
structure, capital structure, activity ratios, profitability ratios, market ratios)
Your discussion should include:
 The firm's current and recent history of financial ratios: show your calculation and
findings in the firm's recent financial ratios).
3.1. Liquidity ratios
3.2 Asset structure and Capital structure
In this section, you will analyze the firm’s asset structure, capital structure and leverage
policy. Your analysis should include:
- A characterization of the firm’s investment policy using: asset structure (cash, receivable,
inventory, fixed asset, financial asset).
- A characterization of the firm’s leverage policy using: Current leverage and recent history of
leverage; recent trends in the use of debt and equity and recent financing activities of the firm
(debt and equity issues and placements and share buybacks); management discussions about
the firm’s leverage policy.
- Does the firm have a target leverage ratio?
- The firm's leverage policy is relative to the leverage policies of comparable firms.
- Assessment of the risk of financial distress and the magnitude of the cost of financial distress
for the firm.
- Draw your conclusion about the firm asset structure and investment policy, current capital
structure and leverage policy.
3.3 Activity ratios and profitability ratios
Du-Pont analysis is applied to break apart ROE to get a much better understanding of
the source of the movement in the company's ROE. You should focus on analyzing the firm's
profitability, asset utilization, and financial leverage. Also, you should show the comparison
with the firm's peers and look at the trend of the firm's performance through time.
3.4 Market ratios
3.5 Analyse the stock price volatility risk
4. Evaluating
Connecting your finding with the firm's share price movement: how does the firm's
performance affect its share price.

Instructions:
- Work in a group of 4-5 students, each group choose a different company listed on the
Vietnam stock exchange.
- The group work is accessed in 3 parts: Presentation (40%), Slides (10%), Essay
(50%):
• Presentation and slides: slides should be less than 20, presentation timing is
needed, no more than 12 minutes.
• Essay: The essay should have the cover page with group name and lists of
 students in group CLEARLY PRINTED, 1200 – 1500 words in English in
week 6.
- The lecturer will give the average mark to the group and each group will have to report
the contribution of each member (print out in detail and give to the lecturer before
presentation).
- Weight: Group work account for 15% of the final mark.
Try your best and Good luck!